Stock markets around the world have been mixed again overnight as investors digest Monday’s 1.1%-1.6% surges by US indices and new all-time highs for the Dow and the S&P 500. This morning finds US index futures flat to down 0.1%. Asia Pacific indices were split with the Hang Seng climbing 1.9% and the Nikkei falling 1.3%.
Over in Europe, indices are in the green with the Dax up 1.1% and the FTSE up 1.2%, despite news of wider losses at Credit Suisse from the Archegos Capital margin liquidation. The bank fired senior staff, including their Chief Risk Officer, announced a $4.7B writeoff, cut its dividend and suspended share buybacks. Broad market action, however, suggests that investors still view this fiasco as contained to a few banks and stocks and continue to discount wider implications, a sign of high underlying investor confidence.
Energy prices are bouncing back this morning with WTI rising 1.8%, gasoline climbing 1.5%, and natural gas bouncing 2.1%. It appears that investors have gotten over OPEC+’s decision to allow production to increase by 1.1 mmbbl/d between May and July to align with an expected recovery in demand as more economies reopen. Talks toward salvaging the US-Iran nuclear deal start today. While it remains possible that a deal sometime down the road could potentially enable Iran to increase exports, today’s market action suggests that investors are not expecting to see progress toward lifting sanctions any time soon.
Economic news has been light overnight, leaving investors to continue responding to yesterday’s positive US non-manufacturing PMI report (63.7 vs street 58.5) while awaiting tomorrow’s European Service PMI reports. The Reserve Bank of Australia maintained its 0.1% benchmark interest rate but indicated it is monitoring rising house prices.
